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The digital economy and advertising diffusion models: Critical mass and the Stalling equilibrium

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  • Feichtinger, Gustav
  • Grass, Dieter
  • Hartl, Richard F.
  • Kort, Peter M.
  • Seidl, Andrea

Abstract

In the digital economy it is frequently observed that products become more valuable the larger is the number of people that use it. To account for such network effects, we introduce a new diffusion equation in a dynamic model of the firm with the aim to obtain the advertising policy that maximizes firm profits. Also an advertising budget is introduced.

Suggested Citation

  • Feichtinger, Gustav & Grass, Dieter & Hartl, Richard F. & Kort, Peter M. & Seidl, Andrea, 2024. "The digital economy and advertising diffusion models: Critical mass and the Stalling equilibrium," European Journal of Operational Research, Elsevier, vol. 318(3), pages 966-978.
    • Handle: RePEc:eee:ejores:v:318:y:2024:i:3:p:966-978
    DOI: 10.1016/j.ejor.2024.05.043
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    References listed on IDEAS

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    1. Schouten, Jop & Cognolato, Davide & Borm, Peter & Cruijssen, Frans, 2024. "Technology Selection with Peer-Based Network Effects," Other publications TiSEM f0f45255-e4f9-44ad-8679-d, Tilburg University, School of Economics and Management.

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